We recently published a list of 13 Best Technology Penny Stocks to Buy Right Now. In this article, we are going to take a look at where Clarivate (NYSE:CLVT) stands against other best technology penny stocks to buy right now.
Marta Norton, the chief investment strategist at Empower, appeared on CNBC’s ‘Squawk Box’ on March 26 to express her bullish outlook on small caps and emphasize that the market’s short-term trajectory depends on upcoming tariff decisions. The question is whether tariffs are short-term and less disruptive negotiating tools, or a disruptive and longer-lasting precursor to a shift in global trade that could address the trade deficit, and create extra revenue for the federal government. Norton explained that tariffs initially affect earnings and are then followed by the companies’ attempts to pass increased costs to consumers. However, this usually doesn’t happen due to demand elasticity and the general nature of consumers. Sectors like tech show minimal earnings revisions despite the potential cost and revenue impacts that come from retaliatory measures.
Norton advised investors to go for a balanced approach in 2025 and stated that there aren’t many areas where you can move in right now, but small caps are an exception to this sentiment. Small-cap stocks have transitioned from relatively cheap to absolutely cheap very recently. While small caps exhibit economic sensitivity, adding positions in them is relatively safer. Later, on March 29, Tony Wang, T. Rowe Price portfolio manager, joined ‘Closing Bell Overtime’ on CNBC to talk about the volatility in tech, and whether it’s a time for heightened caution or not. Wang noted that this volatility is more likely a buying opportunity than not. He observed that growth and momentum in the tech sector have been high in the past few years. The tech sector in particular recently saw two years of strong growth. He thinks that valuations haven’t yet reached capitulation levels.
Our Methodology
We sifted through the Finviz stock screener to compile a list of the top technology penny stocks that were trading under $5 as of March 28. We then selected the 13 technology stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A state-of-the-art computer lab filled with engineers working on new analytics technologies.
Clarivate (NYSE:CLVT)
Share Price as of March 28: $4.09
Number of Hedge Fund Holders: 20
Clarivate (NYSE:CLVT) provides information services and operates through three segments: Academia & Government, Life Sciences & Healthcare, and Intellectual Property. It provides scientific & academic research, solutions, and expertise for research institutions. Its platform allows companies to secure, manage, and protect their IP assets. It also assists decisions regarding drug development lifecycles.
The company has a focus on its recurring revenue stream, particularly its subscription-based offerings. In Q4 2024, subscriptions grew by ~1%, although the recurring revenues were flat. The company’s Value Creation Plan (VCP) has been designed to improve the predictability of subscription and recurring sales. The end goal is to increase the recurring revenue mix from 80% to 87% in 2025, which will mark a 5% year-over-year rise.
To make this happen, the company transitioned its ProQuest ebooks and digital collections in the Academia and Government segment to a subscription-only model. The aim is to make 90% of this segment subscription-based. In Life Sciences as well, the company launched a subscription-based real-world data analytics product. Clarivate (NYSE:CLVT) is also investing in AI-driven solutions to further enhance the subscription offerings.
Cove Street Capital Small Cap Value Fund added a position earlier last year in the company due to its ability to provide aggregated solutions to customers. The fund stated the following regarding Clarivate Plc (NYSE:CLVT) in its Q2 2024 investor letter:
“We also added a position in Clarivate Plc (NYSE:CLVT), a data services provider that operates across academic research, intellectual property, and life sciences. We came to the investment from cross-work in another holding, Research Solutions (ticker: RSSS). Ultimately this company sucks in data from participants in the industry, aggregates it, and provides value added services and tools back to those industry participants. The power is in providing customers access to the aggregate. This was a private equity roll-up of a bunch of different data assets that paid too little attention to product innovation, leading to a period of stagnating growth and repeatedly missing guidance. The business of selling many tools and services on a pile of fixed cost assets (data) remains tremendous as can be seen by Clarivate’s mid-to-high 30% EBITDA margins and strong returns on invested capital. With new management and board members in place and 18 months of an “investment cycle” under their belt, we view the risk/reward of CLVT to be favorable at these levels, with a strong upside case if they can reinvigorate growth to their target levels.”
Overall, CLVT ranks 11th on our list of best technology penny stocks to buy right now. As we acknowledge the growth potential of CLVT, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CLVT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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